Back to Letter A
Analytical ProceduresAnalytical procedures are a form of audit evidence.
Analytical procedures are an important type of evidence on an audit. They involve a comparison of recorded values with expectations developed by the auditor. They consists of evaluations of financial information made by a study of plausible relationships among both financial and nonfinancial data. For example, the current-year accounts receivable balance can be compared to the prior-years' balances after adjusting for any increase or decrease in sales and other economic factors.
There are three types of analytical procedures:
1. Preliminary analytical procedures
2. Substantive analytical procedures
3. Final analytical procedures
Auditing standards require that the auditor conduct analytical procedures in planning the audit. Analytical procedures can be helpful in identifying the existence of unusual transactions or events and amounts, ratios, and trends that might have implications for audit planning.